Heidrick & Struggles International Inc (HSII) 2014 Q3 法說會逐字稿

Good morning. This is Heidrick & Struggles' third-quarter 2014 conference call. This call is being recorded. It may not be reproduced or retransmitted without the Company's consent. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be provided at that time. Now, I will turn the call over to Julie Creed, Vice President of Investor Relations and Real Estate. Please go ahead.

Good morning everyone, and thank you for participating on Heidrick & Struggles' third-quarter 2014 conference call. Joining me on today's call is our CEO, Tracy Wolstencroft, and Rich Pehlke, our Chief Financial Officer.

As a reminder, we will be referring to supporting slides that are available on our website at Heidrick.com. We encourage you to follow along or print them.

As always, we advise you this call may not be reproduced or transmitted without our consent. And in today's call, we will be using the terms adjusted EBITDA and adjusted EBITDA margin. These are non-GAAP financial measures that we believe better explain some of our results. A reconciliation between GAAP and non-GAAP financial measures can be found on the last page of our press release and on Slide 21 in our supporting slides.

Throughout the course of our remarks today, we will be making forward-looking statements, and ask that you please refer to our Safe Harbor language contained in our news release and on Slide 1 of our presentation. The slide numbers that we will be referring to are shown in the bottom right-hand corner of each slide.

And Tracy, I will turn it over to you.

Thanks, Julie, and good morning, everyone, and thank you for joining today's call.

Our third-quarter results reflect continued signs of progress. Year-over-year revenue growth of 6% was driven by $3.8 million of revenue growth from Europe and $3.8 million of growth from our Senn Delaney culture shaping business. We achieved year-over-year improvements in the number of confirmed executive searches and productivity. And importantly, adjusted EBITDA and operating income increased in the third quarter.

Consultant headcount and executive search and leadership consulting at the end of September was stable at 311. It's worth noting that, in the last two months, six of the consultants we hired are returning to Heidrick & Struggles. This is a strong testament not just to the stability of our firm today, but about the potential of our firm looking into the future. We remain focused on recruiting, developing, and retaining highly productive consultants to grow revenue, and we will keep investing to achieve that while managing profitability.

Our third-quarter results were in line with our expectations and the trends continue to be positive. We have stabilized the Company. We grew revenue in line with expectations, we improved productivity, profitability and are investing in what is needed to grow the firm. There is still room for improvement, and we are approaching our initiatives with a sense of urgency. I'll have more to say about some of our initiatives after Rich gives you a review of our results in the quarter.

Thanks Tracy, and good morning everyone. I'll review some of the key financial and operational metrics and touch on some of the key variances.

Slides 2, 3, and 4 indicate what Tracy has already highlighted. Consolidated net revenue in the third quarter was $125.8 million, up 6% or about $7 million compared to last year's third quarter. Executive search and leadership consulting revenue grew about 3% year-over-year, or approximately $3 million. And culture shaping reported a great quarter, up 57% or about $4 million.

Before I go into more detail about the segment results, I want to explain a change we made in the third quarter. As part of our ongoing review of the methodology by which we allocate corporate and support costs to each of our regions, certain costs that were previously allocated to global operations support are now being allocated directly to the regions. When a corporate cost is incurred in support of client-facing operations, it is allocated to the operations based on either revenue or employee headcount drivers. This helps us to continue to better manage operational efficiencies and profitability, and more accurately reflects how we currently manage the business. Our prior-period results in the slides have been recast to reflect these changes and present comparative year-over-year results. And supplemental information has been filed in an 8-K to reflect the changes we've made.

Now, in executive search and leadership consulting, Europe, shown on Slide 6, was again this quarter's key driver of the year-over-year revenue growth, up almost $4 million or $3 million on a constant currency basis. The financial services and industrial practices were the drivers of growth in this region. We ended the quarter with 91 consultants in Europe, up compared to last year's third quarter and up sequentially. Improvements in consultant productivity and average revenue per search also helped drive strong results. Along with the revenue increase, Europe achieved a significant improvement in operating income and operating margin.

Revenue in the Americas region, which is shown on Slide 7, was essentially flat compared to last year's third quarter at $65 million. Growth in global technology and services, financial services and in the education nonprofit and social enterprise practices was offset by declines in the other practices. Consultant headcount was 139 at the end of the third quarter, also up year-over-year and sequentially. Productivity was flat and the average revenue per search was down slightly. Operating income and operating margin declined compared to last year, reflecting an increase in salaries and employee benefits and G&A expenses.

In summary, the Americas results reflect two primary factors. The first is the rebuilding effort in this region with respect to the talent that we've hired over the last year. These consultants are on track to hit their target productivity levels. The second are the declines in the industrial life-sciences practices. But we are seeing encouraging signs of improvement in the industrial practice, and are specifically looking to invest and hire more consultants to enhance our coverage within the life-sciences practice.

As shown on Slide 8, revenue in the Asia-Pacific segment was flat compared to last year at $23.3 million. Growth in the financial services and education, nonprofit and social enterprise practices was offset by declines in the other practices. Consultant headcount at the end of the third quarter was 81, lower year-over-year and sequentially. Productivity was essentially unchanged year-over-year, and the average revenue per search was down slightly. Operating income and operating margin both improved as a result of lower salaries and employee benefits and G&A expenses.

Now, looking at the industry practices globally on Slides Nine, 10 and 11, you'll see that the financial services, education nonprofit and social enterprise, industrial and global technology and services practices all grew year-over-year in the third quarter. For the first nine months of the year, the consumer markets, financial services and global technology and services practices, have been the growth drivers compared to the same period of 2013.

Now, looking at our culture shaping segment on Slide 12, revenue increased 57%, or about $4 million. It was the best quarter ever in Senn Delaney's 30-plus year history. Our reported results benefited from favorable comparisons due to approximately $300,000 of deferred revenue that we were unable to recognize in last year's third quarter as the result of purchase accounting.

The primary explanation for the great results is that we are serving large clients who are at similar points in their respective culture shaping process cycle with the highest point of revenue generation all taking place in the third quarter. So, when we adjust 2013 on a pro forma basis and add back the unrecognized revenue, culture shaping still increased 23% over the nine months. It was a great result.

Importantly to remember, though, is that year-to-date operating margins in this segment have improved even more. Specific to the improvement in operating income in the third quarter, revenue growth, specifically the growth in license revenue, was the key driver. Again, it's important to remind you that because of the size of this business and the timing of project initiations clearly indicated by what happened in the third quarter, there will continue to be variability in individual quarter results.

Turning to Slide 13, third-quarter annualized consultant productivity improved to $1.5 million compared to $1.4 million in last year's third quarter. The trailing 12 months consultant productivity continues to run at $1.5 million. There will be some variability in that metric as we continue to invest in new consultants, but it still moving in the right direction.

As you can see on Slide 14, which is specific to executive search, search confirmations in the third quarter increased 8% year-over-year and continue to trend higher than 2013 levels. As a reminder, fourth-quarter confirmations tend to be lower than the third quarter due primarily to the holiday season and year-end.

Slide 15 shows the average revenue per search of just over $122,000 in the quarter. It is still running at about $115,000 on a trailing 12 months basis.

On Slides 16 and 17, salaries and employee benefits expense increased $2.4 million to $84 million, representing 66.8% of net revenue. Variable compensation increased $3.1 million as a result of the higher revenue, Europe being the key driver, while fixed compensation expense declined about $700,000 in the same period.

Turning to Slide 18, general and administrative expenses increased $3.3 million or 11% to $32.2 million, representing 25.6% of net revenue. $1.8 million of the increase was related to the Global Partners meeting that was held in July in Chicago. Another $1 million of the increase was related to higher professional services, hiring and staffing fees which support our growth initiatives.

Moving to Slides 19 through 23, adjusted EBITDA in the third quarter improved $15 million compared to $13.8 million in the comparable quarter of last year. Adjusted EBITDA margin was 11.9% compared to 11.6%. Operating income in the third quarter increased to $9.6 million. The operating margin improved to 7.6%. The improvements in adjusted EBITDA and operating income reflect the higher net revenue.

Turning to Slides 24 and 25, we reported net income in the third quarter of $3 million and diluted earnings per share was $0.16. These results are lower than last year because of a higher effective tax rate, 66.4% compared to 45.4%. The higher tax rate was due to the establishment of a valuation allowance in the Asia-Pacific segment as well as a change in the forecasted mix of income for the year. Our full-year expected book tax rate is 75%. Our cash tax rate for the year is still expected to be considerably lower.

Looking at Slide 26, cash and cash equivalents at September 30 increased to $159.5 million from $123.4 million at the end of June. Our debt position decreased $[11.5] million in the quarter to $31 million at the end of September. Cash provided by operating activities in the third quarter was $43 million, compared to $36.6 million in last year's third quarter.

Looking forward to fourth quarter, our executive search backlog is shown on Slide 27 and monthly confirmation trends are shown on Slide 28. We are forecasting fourth-quarter net revenue of between $112 million and $123 million. The factors on which we base this forecast include our current backlog, monthly confirmation trends for executive search and leadership consulting, the anticipated fees, expectations for our culture shaping services, the number of consultants, the current economic climate, and stable currency rates.

With that, I'll turn the call back over to you, Tracy.

Thanks, Rich. Recently, we formalized our purpose statement. That is we help our clients change the world one leadership team at a time. Our purpose illustrates that Heidrick serves as a critical bridge between the world's challenges and the leaders who overcome them. And our purpose complements our vision, namely to go to market as a one firm trusted advisor providing integrated leadership solutions to the world's leading organizations.

Now, together, our purpose and our vision serve as a compass to guide us in how we deploy and develop our people, spend our time, and invest our financial capital. So let me touch on the two constituents who are key to fulfilling our purpose and achieving our vision, our people and our clients.

Our people continue to be my top priority. Strengthening our business requires attracting great people and investing in them through training and development. It requires collaboration, trust, teamwork and the ability to embrace change. We are working to fully leverage our global footprint and the breadth of our industry sector expertise.

On our second-quarter conference call, I described energy and enthusiasm we felt at our Global Partners meeting held in early July in Chicago. This positive energy continues to grow. The people at Heidrick today are deeply engaged and want to see us continue to grow. They simply want to win.

We have continued to embrace our own internal collector shaping initiatives led by Senn Delaney. To date, more than 225 of our partners and corporate leaders have participated in the initial phase. By the end of November, another 140 will have joined the process. Not only are we taking the opportunity to actively shape and strengthen Heidrick & Struggles' culture, it has been an opportunity for everyone to experience and understand firsthand the value of one of our core service offerings, again, namely culture shaping.

The second constituent is our clients. Each interaction with a client or prospect is an opportunity to demonstrate our capabilities in search, leadership consulting, and culture shaping, and ultimately build stronger, deeper relationships as their trusted leadership advisor.

I am pleased with the growing number of opportunities we've secured to present our services and solutions to meet our clients' needs. In the third quarter, we formally began our most significant integrated solutions assignment to date for a multibillion-dollar industrial enterprise with over 100,000 employees. The initial phase will start as a culture shaping project followed by leadership assessment and development of the top several hundred executives. Our goal is very clear, to help our client develop the culture, talent, and leadership it needs to be fully competitive in a rapidly changing global business environment.

Moreover, and consistent with our purpose, we must continuously enhance our service and solutions capabilities to address our clients' leadership needs. Toward that effort, we have developed two important assessment tools. One is called Executive Culture Profile, and the other is Leadership Signature.

Executive Culture Profile is used to analyze how well a candidate aligns with a company's culture or whether he or she possesses the traits to drive a new culture. You may recall that I referred to one of the first uses of Executive Culture Profile on our quarterly call back in April.

The other tool which we are introducing today in North America is Leadership Signature, which provides deeper insight into how a candidate will lead in a new role. We developed Leadership Signature in-house, leveraging the Firm's executive search, leadership consulting and culture shaping expertise. These and other tools that we are developing will give us further capability to help our clients better understand the unique cultural and operational factors affecting a leader's performance in any new role. They help better inform our clients about their most important human capital decisions and they will help us further drive our clients' success.

We are also harnessing ideas and innovative thinking to grow our firm and expand its reach. For example, this summer, we launched a new specialty practice for the Internet of Things. The Internet of Things is a popular phrase describing the interconnectivity of devices and machines. It is a massive trend crossing all industries. It represents an important growth opportunity for us as we help our clients in virtually any industry sector find executives able to lead in our hyper-connected world as well as provide the leadership consulting and culture shaping services they need to succeed.

In closing, while third-quarter results were within our expectations, they also suggest we can do better. What excites me most about the opportunity ahead for this firm are the ways we can help our clients build exemplary leadership teams to help achieve their purpose and in doing so help address many of the world's challenges. Leadership is more critical than ever in an increasingly volatile and unpredictable world, and we are privileged to work with our clients in navigating that change. Our purpose and our focus on delivering integrated solutions is resonating both internally as well as with our clients. I'd like to thank our employees for embracing change and for their continued commitment. We are approaching our initiatives with a sense of urgency and we are deeply committed to win in the market.

At this time, let me pause. Rich and I would be happy to take any questions. Jamie, back to you.

(Operator Instructions). Tobey Sommer, SunTrust.

This is actually Frank in for Tobey. Thank you for taking my question. I wanted to ask a little bit about the confirmations in October and the guidance. Can you kind of give us the assumptions in guidance based on what you're seeing in October and kind of for the remainder of the year?

As you probably know from our past practice, we don't specifically go into the individual elements of the guidance forecast, but certainly confirmations is one of our key drivers. We take into account confirmations, anticipated fee revenues, upticks, number of consultants, and really overall look at the economic climate.

So I think -- I don't think our guidance -- I will say this relative to the outlook. I don't think there's any one thing that drives materially our guidance forecast one way or the other. I think there are a couple of things that we are looking at very closely. Number one, the economic climate in what has been our strongest region to date, which is Europe. There has been a lot of public noise in the business marketplace and the economic marketplace that suggests a changing climate in Europe. Our results to date don't reflect that. They have been very strong, but certainly we are watching it very closely.

Number two, the one thing that's been a more volatile element of our revenue this year has been the level of upticks we've reported in each quarter. The changing dynamics around fee structures and certain assignments relative to how they are either priced or structured has brought in a little bit more volatility into upticks, and as you know upticks get recognized more immediately. So, if upticks grow and there's no way of really knowing that until a search is complete, it certainly can drive our revenue up or down in a meaningful way. So, we are looking at a lot of those things but they are all on balance factored into how we build the forecast.

Okay, great. That's very helpful. Then the second question on kind of consultant headcount. What are you seeing or what are you planning for in terms of growth going forward in consulting headcount given the environment? And if you could give us maybe some numbers in terms of turnover, either gross adds and losses or any colors on the type of loss.

Let me just give an overall a comment upfront, this is Tracy, and then Julie can walk through the numbers. The single most important thing with respect to headcount is that, when we take on new people to the Firm, either those who have never been here before, as I referenced a number that have decided to return. What we're looking at is quality and high quality. As you well appreciate, we could grow that consultant number very quickly, but we are not going to do it in a way that is going to compromise on quality. And so for this quarter, you will see roughly we had as many new people come into the Firm as those who left, which netted out to a stable 311, and those who left for all reasons associated with that. But the main overall with respect to consultants is if we can grow that number, we're going to keep on growing that number, but we are going to do it by hiring high-quality consultants who can make an impact in the marketplace. So, you can see that with respect to the productivity numbers that Rich described.

We had, as Tracy said, we had the same number of hires as we did leavers, 13, for a combination of voluntary and involuntary reasons.

Okay, Great. That's helpful. And one last quick question for me. Can you talk a little bit about Asia-Pacific? We saw a sequential decline there. Just what are you seeing and what's your visibility in the region going forward?

Sure. A couple things are impacting our Asia-Pacific region. Number one, where some of the turnover happened, as we indicated in the comments about the consultant headcount, it was a little bit more volatile in that region. Number two, we have seen from a fee perspective a slight -- we haven't seen the momentum we would like to see in terms of overall fee structure. We are still we believe the largest executive search firm in the region, and so we have strong market share but we've seen trends in peak and growth not be as strong as we would like just reflecting kind of a slowdown in economic growth overall from anticipated rates in the region. The region is still growing, but salaries and compensation structures particularly haven't grown as much as hopefully we would have liked. And as a result it's impacted some of the fees as well.

All right, great. Thank you very much.

Kevin McVeigh, Macquarie Capital.

Tracy, you talked about kind of stabilizing the platform. And then just how are we thinking about kind of the next levers you pull to drive a little more of the commercial revenue? And the other thing was it's kind of an interesting dynamic where it seems like you're seeing some real good momentum in Europe in the culture shaping business but the US hasn't participated as much. Just any thoughts around that if I could?

Sure, thanks Kevin. In the United States, as Rich described, there are two places where we have in particular seen an impact with regard to the people we have on the ground and the rebuilding that we are doing. One is in industrials, and the second is around life-sciences. The good news is that we have momentum in both. We have the quality of the assignments and the quality of the clients we are working with in industrials and life-sciences is very high. If there is a balance to that, it's that we are looking for more people. We're looking for more people and more opportunity to show that what we are doing for clients we can do for an expanded list. So, that has a lot to do with the numbers that you see in the US and that's just the continuation of the theme since my arrival, which is rebuilding where we had lost talent in the marketplace.

Got it. And then the other thing, you had mentioned -- I don't know, just anything in terms of the changing dynamics around fee structure, just any thoughts on that? Is that more from a competitive perspective or just as the culture shaping becomes a bigger component of the value proposition, any sense of, again, just change in fee structures, anything like that?

I'd say look, it's a competitive marketplace, as all of you know on the phone. I would say one of the reasons why you see us adding assessment tools to our search process, both on culture with Executive Culture Profile and then with respect to leadership with the Leadership Signature which we are announcing today, is we recognize that clients are looking for more. And this is an important takeaway that I have felt from being in the marketplace with clients, with our consultants, is they are looking for our judgment, but they are also looking for assessment processes that accompany it. And our interest in investing in those assessment vehicles is really to complement our search process right now as well as expand more broadly down the road with respect to assessment. But in part, the reason we're doing that is we realize clients are looking for more value in terms of what they get from Heidrick and from some of our competition. And we want to be in a position to give them that so we don't have to adjust the fee, but rather can support the fee because of the higher value they get from us.

Super. Thank you.

(Operator Instructions). Kevin Steinke, Barrington Research.

Good morning. I was wondering if you would speak more to your success in winning your largest integrated assignment, and how that came about and if you have others like those in the pipeline.

Sure. So, in this particular assignment, it really speaks to one of the major themes that we are driving culturally here, which I referenced when I described our vision, which is to go to market as one firm. And the way this came about was from our executive search consultants in the field raising the opportunity they saw with respect to this industrial, and the opportunity that they felt that there was an expanded conversation to be had with that client, not just about search, but about our leadership consulting and in particular the assessment component of that, and then beyond that to culture shaping. And what quickly became clear as we got into it with the client is that the dimension that Heidrick could bring to the discussion that they valued very high and very much wanted to start very quickly was culture shaping because the company, as I referenced, has 100,000-plus employees, they are adjusting the direction, they needed to create alignment around that. And so really simultaneous with the assessment process, we have a culture shaping process ongoing, and it's a great example of also very much working at the top. These kind of integrated solutions have to be coordinated internally across all levels, but very much including the CEO and the broad C suite. And that's exactly what's happening here. So, net-net, a good example of going to market as one firm.

I would say that to your broader question about how many more of these, I'm not going to speak to numbers. But I would just convey that the culture that we are driving towards here and that we are working towards is to help people at Heidrick understand the power of that integrated platform and that integrated service platform to our clients, so search plus.

Perfect, that's helpful. And you've talked about, quite a bit about trying to attract new consultants and rebuild headcount that way. What about the internal development side? Have you done anything to change the processes there in terms of developing people, and maybe getting them up to speed more quickly and building headcount that way as well?

The answer is yes. I think one of the assets that I saw really from my earliest days here at Heidrick is the power of that internal development that we have with people from their earliest years as an associate right through to partner. Some of their most productive partners as well as most impactful in the commercial market have been at Heidrick from the earliest days of search. And so that is the whole -- what you are really speaking to is the whole dimension of attracting talent, but also developing it and retaining it. I would say developing young talent as it comes in all the way through is something that we are very focused on. There's a couple of initiatives right now the management committee is looking at around that to strengthen that whole curve from associate to partner. And as we do every year, we are, by the end of the year, we will be deep into the whole process of who is the talent that we have right now coming up that we think are ready to be principals and partners, and that's a very rigorous thoughtful process. Consistent with my opening comment, it's absolutely one of the best assets that I noticed very quickly coming into Heidrick, so it continues.

Great. Rich, on the numbers, in terms of the fourth quarter, how sustainable is the strength in culture shaping? Do you assume that continues into the fourth quarter, or could there be some drop off just based on the timing of project work?

That's an astute point. As I think I mentioned in my comments, culture shaping is going to be a lumpy and volatile revenue and earnings stream because we can't always control the time at which a client takes the initiatives. And it's not of a business of scale yet where we can cover that volatility. So an outstanding quarter this year where if you look at it on a year-to-date basis, we're pretty far along to making kind of our year-to-date type of numbers that we indicated when we bought this company.

So we could see some fall off in the fourth quarter. That's why we want people to make sure to be aware that as you see that volatility, don't get alarmed by it because overall the Company is doing exactly what we thought it would do and more. And as we -- and to build on Tracy's points, as we try and drive the integrated solutions approach with more and more of our clients and with more of our people and they see the power of that, the add-on result could be very big.

Perfect. And then on G&A expenses, with the Global Partners meeting now past you and some of those professional services fees, could we potentially see a sequential decline in G&A in the fourth quarter?

I think so. My anticipation is I still think I'm going to finish around the level I thought I would for the year in overall G&A expenses. Most of the increase I've seen in G&A has been either people-related, hiring-related, or to help drive the revenue growth at the field level. It's not been very much at the corporate level. There is some technology expense that's caused a little uptick in the run rate this year because we've added some tools in our proprietary database to make it easier for our consultants to work and gather data. But I am still pretty pleased at the level of where it is. But even indicated by my comments on the segments, we are constantly looking at it.

The key point to remember about our G&A, Kevin, is that we could run a lot more revenue through this model. As we build the revenue capabilities of this business, the incremental operating leverage will be big. It hasn't always come through in 2014, because you will see the difference has been in variable compensation because of a broader base of participation and improvement in the productivity, which is great. But that's coming off a year where we didn't have it because of the bad results in Europe and so forth. So as we have more balanced results and if we build on this, the operating leverage gets better.

Okay, thanks for taking my questions.

(Operator Instructions). Tobey Sommer, SunTrust.

Just wanted to ask about bonus accrual going into 4Q as I try and kind of look at a spendable cash number also -- cash held in other jurisdictions. Any color you can give us on that, that would be great.

The bonus accrual overall, as we indicated, our variable comp has increased in the quarter. It increased about $3 million year-over-year. And it's reflective of the fact that we have a stronger level of bonus accrual across our business, and that's driven by two things. Number one, more people achieving target productivity levels where they are bonus-eligible in our various payout formulas, and the overall accrual rate at which we feed that bonus accrual because of the profitability and growth in the business. So it's definitely up year-over-year in a material way. It's offset in part by the fact that we continue to address a relatively high fixed cost base, particularly in salary and benefits. So, we try and make more of the formula performance-driven versus fixed risk upfront. We are still not where we want to be, but we've made some considerable progress in this year and that's helped to offset it.

Tim McHugh, William Blair.

Good morning. It Stephen Sheldon in for Tim. Thanks for taking my questions. First, I was just curious about your expectations for consultant headcount by year-end. Should we expect headcount to be up some from where headcount stood at the end of the third quarter?

Again, we don't give the details about a specific number. Fourth quarter is a pretty tough time. And when you think about it's not a promotion cycle time for us, and also the fact that, at year-end, especially in a busy market, in a busy industry right now, people are near their bonus cycles and so forth, so you don't tend to see as much movement. It's a constant effort on our part. We continually have a pipeline, but for example usually right now if we're talking to somebody in Europe, you're looking at a hire that happens sometimes usually in the first quarter because of garden leave and mechanics. So, I'm not sure we anticipate that it would be significantly different overall. But again, it's a constant effort to build that level.

We've said it many times and we will continue to say it. The platform is big enough. The brand is big enough. The practices are big enough. The opportunities are big enough for us to continue to build the consultant base and we're going to continue to invest in that intelligently, as Tracy indicated. We are not going to chase people with money though, or things like that. We're going to do it the right way. We've had -- the best success we've had is to continue to grow and develop our people, and we will supplement that with specific needs and opportunities that cover areas where we are not as strong as we would like to be on a practice basis.

Okay, that's helpful. And then I know you talked about overall turnover, but could you maybe just give some more detail about the sequential headcount decline in Asia-Pacific? What was driving that? And is there anything you can provide, some additional color there?

Yes, in part there, I think we had some movement in large part because of performance matters.

Okay, thanks.

At this time, there are no further questions over the phone.

Okay, thank you all for taking the time this morning. Thank you for your questions and your interest. We will speak to you, if not before, in another quarter. Thanks again.

Thank you for your participation. That does conclude today's call.